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SIMON MCKIE analyses an interesting inheritance tax planning product
KEY POINTS
- The structure of the policies under review.
- HMRC’s approach to insurance policies and the pre-owned assets charge.
- The treatment of reversionary interests.
- Calculating the ten-yearly charges.
- The advancement of the trust fund and surrender of policies.
An Isle of Man assurance company offers an arrangement using a bond consisting of a group of endowment assurance policies which are issued to a policyholder who then assigns the policies on trusts.
Compared to conventional discounted gift trusts the arrangement offers the additional benefit of allowing the original policyholder’s right to cash benefits to be deferred indefinitely without creating a further transfer of value. The cost of this additional flexibility is that there is no ‘discount’ on the measure of the initial transfer of value.
However like much inheritance tax planning based on...
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